CORPORATE TAXES
SIGNIFICANT DEVELOPMENTS
As of January 1 , 1999, thin-capitalization rules have been introduced.
TAXES ON CORPORATE INCOME
All legal entities and state organizational entities without corporate status (with the exception of partnerships ) that conduct economic activity are obliged to pay corporate income tax at a rate of 34% (for 1999 ).
Companies with foreign participation can be set up in Poland as either limited liability companies or joint stock companies . Limited liability companies and joint stock companies are legal entities whose income is taxed at a flat rate of 34% (32% as of January 1, 2000 ) of the company's derived tax base . There is no limitation on the percentage of foreign participation .
CORPORATE RESIDENCE
A company is considered resident if it its legal seat or management on the territory of the Republic of Portion of the continental shelf beyond the territorial waters of the Republic of Poland over which the country , under domestic law and in compliance with international law , exercises rights relating to the exploration and exploitation of the seabed and of the natural resources therein .
OTHER TAXES
Value-added tax / VAT is imposed on goods sold and services rendered in Poland . The standard rate is 22% . Certain items are subject to a reduced rate of 7% , including pharmaceutical products , children's products and some building materials . Some supplies are exempt from VAT, including (but not limited to ) basic foods and financial , insurance and educational services . Certain goods and services are zero rated , for example ,of services rendered on Polish territory of Poland . The majority of services rendered on polish territory for
foreign customers are not treated as exports and are subject to Polish VAT . Some services , such as expert consultancy contract manufacturing and services connected with the export of goods , are zero-rated when performed for a foreign client (subject to certain conditions ), notwithstanding that the services are rendered on Polish territory .excise tax /Excise tax is levied on the importation or production of excise goods , which include alcohol , cigarettes , petrol , chewing
gum , plastic packaging , passenger cars , and high-class electronic equipment.
property tax / Taxpayers are natural and legal persons that are owners or freeholders of property and dependent holders of administrators of property ( buildings , construction used for business , land that is not subject to agricultural tax ) belonging to the state if this tenure of land results from a legal agreement . The tax rates are determined by particular county councils but cannot be higher than the following (
for 1999 ).
1.For buildings used for business--PLN13.47/ square meter .
2.For land used for business--PLN0.46/ square meter.
3.Construction--2% of the value.
BRANCH INCOME
There are three different types of representative offices ( branch offices ) in Poland , as follows .
1.Branch office.
2.Technical information office ( although , as a practical matter , permits are no longer issued for this type of office ).
3.Supervisory office.
A branch office is allowed to perform only limited economic activities ; therefore , it may be liable for corporate income tax . A branch office pays tax at the standard corporate income tax rate of 34% ( for 1999 ) on the basis of profit attributed to its operations in Poland , unless it can establish , on the basis of a tax treaty , that its business presence in Poland does not amount to a permanent establishment , in which case its profits would not be subject to Polish tax . Where tax is due and the attribution of profit is not possible because of the lack of appropriate accounting records , a taxable base can be established through imputation .
The rates of imputed income are as follows .
1. Foreign trade--5% of total sales .
2.Construction and building activity - 10% of total sales .
3. Income from commissions - 60% of total sales .
4. Other activity--20%.
INCOME DETERMINATION
inventory valuation / Inventory should be valued at the lower of cost for cost of production and net realizable value . However , any write-downs in value are not recognized for tax purposes until inventory is sold or otherwise disposed of . The methods acceptable for inventory valuation for tax accounting purposes are standard cost , average ( weighted ) cost ,FIFO ,and LIFO .
Conform
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